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The purpose of this study is to evaluate the effectiveness of State Agencies current peer group systems, and to provide guidance to State Agencies on how to evaluate and update their systems. Specifically, it uses empirical analysis to identify one or more effective models for establishing vendor peer groups that could apply to most State Agencies.

This study is part of a larger FNS effort to ensure WIC program integrity and to comply with the Improper Payments Information Act of 2002 (IPIA) (Public Law 107-300), which requires FNS to estimate improper payments (IP) in its programs.

This report provides improper payment estimates for fiscal year (FY) 2011 using a methodology for “aging” the 2005 bookend study. The methodology yields nationally representative estimates of the number of vendors that over- and undercharged and the amount of over- and undercharges across all WIC vendors.

This report provides improper payment estimates for FY 2010 using a methodology for “aging” the 2005 bookend study. The methodology yields nationally representative estimates of the number of vendors that over- and undercharged and the amount of over- and undercharges across all WIC vendors.

About every 7 years, FNS performs a nationally representative study (called a bookend study1) to examine the extent of error and abuse among food vendors authorized to accept WIC vouchers. The last bookend study was the 2005 WIC Vendor Management Study, which used fiscal year (FY) 2005 expenditure data to derive an estimate for 2004. Between bookend studies, there is a need to derive annual estimates of the level of improper payments for compliance with the Improper Payments Information Act of 2002. The purpose of the subsequent annual studies was to provide annual updates to the bookend studies using the developed aging methodology.

The Special Supplemental Nutrition Program for Women, Infants and Children (WIC) serves low- income pregnant, breastfeeding, or postpartum women, and infants and children up to age 5 who are at nutritional risk. In almost all States, the Program provides eligible recipients with vouchers that can be used at authorized stores—referred to as vendors. The 46,000 authorized vendors are mostly grocery stores and pharmacies which have signed agreements to follow program rules. In 1991 and 1998, FNS conducted national studies of WIC vendors to determine the extent of vendor violation of program rules. After the 1998 study, FNS issued regulations to correct vendor practices. The 2005 study replicates the 1998 study to determine whether the regulations were effective, and to measure the frequency of vendor violations and the degree to which vendors charge accurate prices for WIC transactions. It also provides data on payment error as required by the Improper Payments Information Act (IPIA) of 2002 (P.L. 107-300).

The Food and Nutrition Service (FNS) published “The WIC Vendor Management Study, 1998” in July 2001 which examined, in part, the extent to which retail grocers, defined as “vendors” in the Special Supplemental Nutrition Program for Women, Infants, and Children (WIC), were violating program rules and regulations. The 1998 study is a follow-up to the “WIC Vendor Issues Study, 1991” published by FNS in May 1993. From an operational and management perspective, it is important for FNS to know if there have been any changes in vendor management practices from 1991 to 1998. However, as there were differences in the way the data were collected, analyzed, and reported, the findings presented in the two published reports cannot be directly compared. This report presents a re-analysis of the data from the 1991 and 1998 studies, which allows comparisons of the findings.

The purpose of the study was to learn the extent to which retail grocers, defined as "vendors" in the WIC Program, authorized to provide food to WIC participants, were violating program rules and procedures, and to determine which programmatic and/or demographic variables could be associated with vendor violations.